The Basel Committee for Banking Supervision has proposed new standards for stablecoins, aiming to distinguish them from extra risky cryptocurrencies like Bitcoin.
A consultative document launched on Thursday outlines 11 requirements that stablecoins should meet to be labeled as Group 1b property, thought-about decrease danger than unbacked digital property.
The requirements be sure that the reserve property backing stablecoins are of excessive credit score high quality, have short-term maturities, and exhibit low volatility. This transfer is a part of the committee’s broader efforts to handle the dangers related to digital property within the banking sector.
Cryptocurrencies like Bitcoin (BTC) are topic to the very best danger weight of 1,250%, requiring banks to carry capital equal to their publicity. Nevertheless, stablecoins with efficient stabilization mechanisms might obtain preferential Group 1b regulatory remedy. This implies they’re topic to capital necessities primarily based on the danger weights of their underlying exposures, as outlined within the current Basel Framework.
For a stablecoin to qualify for this remedy, it should at all times be redeemable, making certain that solely these issued by regulated entities with sturdy redemption rights and governance are eligible. Stablecoins failing to satisfy these standards fall below group two, going through a extra conservative capital remedy.
The BCBS emphasizes the necessity for stablecoin reserves to be invested in property with excessive credit score high quality to reduce credit score danger, and people property should even be shielded from chapter dangers of events concerned within the stablecoin’s operations.
This growth comes as world ranking company S&P International launched a stability evaluation for stablecoins, starting from one on the strongest to 5 being the weakest, assessing their potential to keep up their peg to underlying property.
